GGR252H5 Study Guide - Final Guide: Loyalty Program, Debit Card, Target Market

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10 Aug 2016
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Demand Curve
y – axis price of good
x – axis quantity purchased
the higher P the less Q
Spatial Demand Curve
y – axis Q purchased per household
x – axis distance range
Distance cost to consumer such as gas price.
The closer, the more you buy.
There is a point where you do not buy because it is too far.
Demand determine by price and transport cost.
This one tells us more info.
Bid Rent
1.) bid rent for street retailing in a metropolitan
area
2.) bid rent for regional shopping centre
- the more accessible, the higher cost, provide higher order activities
- close to focal point, high rent
- sensitive of traffic flow
- ability of paying rent
- closer to the core, higher density
- trade off between cost and distance
- some stores do not care about rent
- higher pedestrian flow, higher rent
- large retail chain need 1 store locate @ high rent place eg. H&M, Gap
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Market Threshold
Minimum market required to stay in operation.
1st intersection, the more you sell, the lower the average cost (AC)
Demand > Cost Profit
2nd intersection, loss, doesn’t mean shut down
What to do if loss? Fixed Cost Variable Cost
1.) Reduce rent, relocate to lower rent place
2.) More part time staff, less employee benefits
3.) Hire high school student because they have less request on salary.
4.) Technology, track products by barcode.
Range of Operation
Profit
Stay in Business.
Huff Model Predictive Tool
Normative Approach: ask what SHOULD BE
Key Principle: distance and size in a profitability framework
What is the probability that the consumer in this area will shop at one of a
number of centre
What if scenarios: (both public and private are interested in these scenarios!)
1.) If we have a new centre, how will this affect the others
2.) If we expand
3.) If there are in-migrants and out-migrants
4.) If expenditure changed
5.) If mobility changed, eg more old people
Exponent: is large for goods associated with greater friction of distance.
Large for convenience stores than shopping centers. Ranged from 0.5 – 2.5.
Convenience goods – high degree of consumption food/clothes.
Shopping Goods – low degree of consumption electronics/cell-phone.
*Assumptions:
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